What Will Facebook Do With $10 Billion?

What will Facebook do with $100 billion? According to a Tuesday analyst report, it can revamp revenue streams in a bid for "global domination."

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News of today's expected Facebook IPO has focused a lot on the company's worth, which will reportedly be valued between $75 billion and $100 billion, infusing the social network with up to $10 billion. But what will the social network do with that cash?
According to a Tuesday analyst report, it can revamp revenue streams in a bid for "global domination."

"The fact is this newfound wealth could not only allow Facebook to solve its biggest business challenges, it could also help Facebook finally achieve its longstanding goal to change how marketing works," Forrester analyst Nate Elliott wrote in a blog post.

Facebook makes "almost all" of its money from advertising, but the company "harbors a dirty little secret: Marketing on Facebook doesn't work very well," Elliott wrote. A recent study from Australia's Ehrenberg-Bass Institute, in fact, indicated that just around 1 percent or so of those "liking" a particular brand on Facebook actually engage with it in any meaningful capacity.

Elliott said "Facebook can  and must  do much more to turn the data it has on users into effective ad targeting," which might mean buying a new platform or developing better tools for branded pages.

Furthermore, Facebook needs to "swing for the fences  and data is the key," he continued. "Two years from now, Facebook should be competing with Google to see who can best use your own data to help marketers target ads to you, no matter where those ads appear."

Mining customer data to serve up targeted ads or content can be a bit of a privacy minefield, though, and Facebook has had its share of regulatory scrutiny over the years. In November, the Federal Trade Commission found that Facebook "deceived customers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public."

Elliott acknowledged that in his post. "One external threat it can't outrun, though, is the government," he wrote. But with an influx of cash, Facebook can better defend itself. "One of the first things Google did after its IPO was to hire an army of lobbyists, and I expect Facebook to follow suit  especially if it follows the advice above and looks for creative and expansive new ways to use its data," Elliott said.

"Expect lots of blue business cards floating around Brussels and Washington by the end of 2012. After all, $10 billion buys a lot of influence," he said.

Facebook recently topped Orkut in Brazil to become the country's largest social network in the country, and that type of growth is where Facebook needs to focus going forward.

"In the global markets where users are most enthusiastic in their use of social media  including Asia and many large emerging markets  Facebook isn't doing as well," Elliott said. "It's behind in Russia, Japan, and Korea, and it's not even playing in China," where the service is banned.

When asked about expanding into China during a November appearance on Charlie Rose, Facebook chief Mark Zuckerberg said that, for now, he would rather focus on "places in the world where we can connect people more simply." He said that "if you do the things that are easier first, then you can actually make a lot of progress," so China is "not the top thing we're thinking about right now."

What do you think Facebook should do with its cash? Let us know in the comments.

Chloe Albanesius has been with PCMag.com since April 2007, most recently as Executive Editor for News and Features. Prior to that, she worked for a year covering financial IT on Wall Street for Incisive Media. From 2002 to 2005, Chloe covered technology policy for The National Journal's Technology Daily in Washington, DC. She has held internships at NBC's Meet the Press, washingtonpost.com, the Tate Gallery press office in London, Roll Call, and Congressional Quarterly. She graduated with a bachelor's degree in journalism from American University...
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